Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2016 | Jan. 23, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | QUALITY SYSTEMS, INC | |
Entity Central Index Key | 708,818 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,437,163 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2016 | Mar. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 23,994 | $ 27,176 |
Restricted cash and cash equivalents | 4,647 | 5,320 |
Marketable securities | 0 | 9,297 |
Accounts receivable, net | 75,516 | 94,024 |
Inventory | 252 | 555 |
Income taxes receivable | 14,481 | 32,709 |
Prepaid expenses and other current assets | 15,944 | 14,910 |
Total current assets | 134,834 | 183,991 |
Equipment and improvements, net | 26,097 | 25,790 |
Capitalized software costs, net | 12,995 | 13,250 |
Deferred income taxes, net | 9,780 | 8,198 |
Intangibles, net | 74,722 | 91,675 |
Goodwill | 185,888 | 188,837 |
Other assets | 18,703 | 19,049 |
Total assets | 463,019 | 530,790 |
Current liabilities: | ||
Accounts payable | 5,223 | 11,126 |
Deferred revenue | 49,763 | 57,935 |
Accrued compensation and related benefits | 18,620 | 18,670 |
Income taxes payable | 8 | 91 |
Other current liabilities | 44,338 | 50,238 |
Total current liabilities | 117,952 | 138,060 |
Deferred revenue, net of current | 1,312 | 1,335 |
Deferred compensation | 6,738 | 6,357 |
Line of credit | 25,000 | 105,000 |
Other noncurrent liabilities | 14,267 | 10,661 |
Total liabilities | 165,269 | 261,413 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
$0.01 par value; authorized 100,000 shares; issued and outstanding 62,437 and 60,978 shares at December 31, 2016 and March 31, 2016, respectively | 624 | 610 |
Additional paid-in capital | 225,967 | 211,262 |
Accumulated other comprehensive loss | (653) | (481) |
Retained earnings | 71,812 | 57,986 |
Total shareholders' equity | 297,750 | 269,377 |
Total liabilities and shareholders' equity | $ 463,019 | $ 530,790 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2016 | Mar. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 62,437 | 60,978 |
Common stock, shares outstanding | 62,437 | 60,978 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | ||||
Software license and hardware | $ 16,995,000 | $ 16,150,000 | $ 48,966,000 | $ 52,026,000 |
Software related subscription services | 22,546,000 | 11,705,000 | 63,911,000 | 36,388,000 |
Total software, hardware and related | 39,541,000 | 27,855,000 | 112,877,000 | 88,414,000 |
Support and maintenance | 39,924,000 | 39,519,000 | 116,905,000 | 125,408,000 |
Revenue cycle management and related services | 20,048,000 | 21,594,000 | 62,037,000 | 62,630,000 |
Electronic data interchange and data services | 21,790,000 | 20,643,000 | 65,527,000 | 61,413,000 |
Professional services | 6,565,000 | 7,421,000 | 19,893,000 | 26,700,000 |
Total revenues | 127,868,000 | 117,032,000 | 377,239,000 | 364,565,000 |
Cost of revenue: | ||||
Software license and hardware | 5,680,000 | 6,530,000 | 19,227,000 | 20,149,000 |
Software related subscription services | 9,345,000 | 5,533,000 | 27,107,000 | 17,454,000 |
Total software, hardware and related | 15,025,000 | 12,063,000 | 46,334,000 | 37,603,000 |
Support and maintenance | 7,299,000 | 7,537,000 | 20,903,000 | 23,874,000 |
Revenue cycle management and related services | 13,462,000 | 14,381,000 | 42,052,000 | 43,573,000 |
Electronic data interchange and data services | 12,662,000 | 12,437,000 | 38,232,000 | 37,302,000 |
Professional services | 5,904,000 | 7,367,000 | 19,643,000 | 24,008,000 |
Total cost of revenue | 54,352,000 | 53,785,000 | 167,164,000 | 166,360,000 |
Gross profit | 73,516,000 | 63,247,000 | 210,075,000 | 198,205,000 |
Operating expenses: | ||||
Selling, general and administrative | 37,542,000 | 39,395,000 | 120,913,000 | 115,962,000 |
Research and development costs, net | 19,714,000 | 14,518,000 | 56,230,000 | 49,584,000 |
Amortization of acquired intangible assets | 2,568,000 | 897,000 | 7,889,000 | 2,692,000 |
Restructuring costs | 231,000 | 0 | 4,685,000 | 0 |
Total operating expenses | 60,055,000 | 54,810,000 | 189,717,000 | 168,238,000 |
Income from operations | 13,461,000 | 8,437,000 | 20,358,000 | 29,967,000 |
Interest income | 0 | 60,000 | 9,000 | 406,000 |
Interest expense | (629,000) | (11,000) | (2,445,000) | (14,000) |
Other expense, net | (4,000) | (43,000) | (146,000) | (147,000) |
Income before provision for income taxes | 12,828,000 | 8,443,000 | 17,776,000 | 30,212,000 |
Provision for income taxes | 2,342,000 | 1,141,000 | 3,950,000 | 8,233,000 |
Net income | 10,486,000 | 7,302,000 | 13,826,000 | 21,979,000 |
Foreign currency translation, net of tax | (89,000) | (7,000) | (182,000) | (291,000) |
Unrealized gain (loss) on marketable securities, net of tax | 0 | (29,000) | 10,000 | (34,000) |
Comprehensive income | $ 10,397,000 | $ 7,266,000 | $ 13,654,000 | $ 21,654,000 |
Net income per share: | ||||
Basic (in usd per share) | $ 0.17 | $ 0.12 | $ 0.22 | $ 0.36 |
Diluted (in usd per share) | $ 0.17 | $ 0.12 | $ 0.22 | $ 0.36 |
Weighted-average shares outstanding: | ||||
Basic (in usd per share) | 62,093 | 60,867 | 61,645 | 60,548 |
Diluted (in usd per share) | 62,093 | 61,279 | 61,900 | 61,190 |
Dividends declared per common share | $ 0 | $ 0.175 | $ 0 | $ 0.525 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) | 9 Months Ended | |
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Statement of Cash Flows [Abstract] | ||
Tenant Improvement Allowance Received from Landlord | $ 3,094,000 | $ 1,324,000 |
Cash flows from operating activities: | ||
Net income | 13,826,000 | 21,979,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | (7,562,000) | (6,577,000) |
Amortization of capitalized software costs | 6,626,000 | 7,428,000 |
Amortization of other intangibles | 16,953,000 | 5,402,000 |
Amortization of debt issuance costs | 807,301.88 | 0 |
Loss on disposal of equipment and improvements | 452,000 | 158,000 |
Provision for bad debts | 2,503,000 | 2,107,000 |
Provision for inventory obsolescence | 369,000 | 118,000 |
Share-based compensation | 5,177,000 | 2,328,000 |
Deferred income taxes | 1,367,000 | 741,000 |
Change in fair value of contingent consideration | 3,797,000 | 1,201,000 |
Loss on disposition of Hospital Solutions Division | 0 | 1,366,000 |
Net cash provided by operating activities | 81,423,000 | 27,292,000 |
Changes in assets and liabilities: | ||
Accounts receivable | 16,005,000 | 11,313,000 |
Inventory | (66,000) | (160,000) |
Accounts payable | (5,983,000) | 6,000 |
Deferred revenue | (8,195,000) | (10,320,000) |
Accrued compensation and related benefits | (50,000) | (7,706,000) |
Income taxes | 18,060,000 | (18,395,000) |
Deferred compensation | 381,000 | 917,000 |
Other assets and liabilities | 1,832,000 | 2,232,000 |
Cash flows from investing activities: | ||
Additions to capitalized software costs | (6,371,000) | (11,604,000) |
Proceeds from sales and maturities of marketable securities | 9,291,000 | 5,310,000 |
Additions to equipment and improvements | (8,242,000) | (9,926,000) |
Purchases of marketable securities | 0 | (6,024,000) |
HealthFusion working capital adjustment payment | 282,000 | 0 |
Net cash used in investing activities | (5,604,000) | (22,244,000) |
Cash flows from financing activities: | ||
Principal repayments on line of credit | (80,000,000) | 0 |
Proceeds from issuance of shares under employee plans | 999,000 | 732,000 |
Dividends paid | 0 | (32,125,000) |
Net cash used in financing activities | (79,001,000) | (31,393,000) |
Net increase decrease in cash and cash equivalents | (3,182,000) | (26,345,000) |
Cash and cash equivalents at beginning of period | 27,176,000 | 118,993,000 |
Cash and cash equivalents at end of period | 23,994,000 | |
Cash paid for income taxes | 4,455,000 | 27,653,000 |
Proceeds from Income Tax Refunds | 19,932,000 | 2,079,000 |
Cash paid for interest | 1,670,000 | 0 |
Dividends declared but not paid | 0 | 10,726,000 |
Unpaid additions to equipment and improvements | 0 | |
Common stock issued for Mirth share-based contingent consideration | $ 9,273,000 | $ 9,273,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated. Basis of Presentation. The accompanying unaudited consolidated financial statements as of December 31, 2016 and for the three and nine months ended December 31, 2016 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 . In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. Significant Accounting Policies . Effective July 1, 2016, we revised our reportable operating segments (see Note 14). There have been no other material changes to the significant accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 . Share-Based Compensation. The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income for the three and nine months ended December 31, 2016 and 2015 : Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Costs and expenses: Cost of revenue $ 144 $ 101 $ 459 $ 300 Research and development costs, net 273 67 690 280 Selling, general and administrative 1,584 575 4,028 1,748 Total share-based compensation 2,001 743 5,177 2,328 Income tax benefit (718 ) (225 ) (1,825 ) (701 ) Decrease in net income $ 1,283 $ 518 $ 3,352 $ 1,627 Recent Accounting Standards. Recent accounting pronouncements requiring implementation in future periods are discussed below or in the notes, where applicable. In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 provides guidance on the classification of restricted cash and cash equivalents in the statement of cash flows. Although it does not provide a definition of restricted cash or restricted cash equivalents, it states that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-18 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-16 is effective for us in the first quarter of fiscal 2019, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add and clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice related to how such cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-15 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for and reporting on share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The amendments in this update are to be applied differently upon adoption with certain amendments being applied prospectively, retrospectively and under a modified retrospective transition method. We expect to adopt ASU 2016-09 in the first quarter of fiscal 2018, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Arrangement ("ASU 2015-05"), which requires a customer to determine whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software or as a service contract. ASU 2015-05 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. Upon adoption, an entity has the option to apply the provisions of ASU 2015-05 either prospectively to all arrangements entered into or materially modified, or retrospectively. The adoption of this new standard did not have material impact on our consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ("ASU 2014-15"), which incorporates and expands upon certain principles that currently exist in U.S. auditing standards. ASU 2014-15 provides guidance regarding management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. The new standard requires management to perform interim and annual evaluations and sets forth principles for considering the mitigating effect of management's plans. The standard mandates certain disclosures when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. ASU 2014-15 is effective for us commencing fiscal year ending March 31, 2017. The adoption of this new standard has not had, and is not expected to have, an impact on our consolidated financial statements . In May 2014, the FASB, along with the International Accounting Standards Board, issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. In July 2015 decision, the FASB issued ASU 2015-14, Deferral of Effective Date ("ASU 2015-14") to delay the effective date by one year. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) –Principal versus Agent Consideration ("ASU 2016-08"). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing ("ASU 2016-10”). In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16 ("ASU 2016-11") and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) –Narrow Scope Improvements and Practical Expedients ("ASU 2016-12"). The new ASUs do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather help to provide further interpretive clarifications on the new guidance in ASU 2014-09. ASU 2014-09, as amended by ASU 2015-14, is effective for us in the first quarter of fiscal 2019. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. We have established a cross-functional team to assess the potential impact of the new revenue standard. Our assessment process consists of reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our revenue contracts and identifying appropriate changes to our business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. Our initial assessment of the impact of the new revenue standard on our current business processes, systems and controls are expected to be completed during fiscal 2017. Additionally, we are currently evaluating the potential impact that the implementation of this new revenue standard will have on our consolidated financial statements as well as selection of the method of adoption. We currently do not expect to implement this new standard prior to the required effective date. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, 2016 and March 31, 2016 : Balance at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) December 31, ASSETS Cash and cash equivalents (1) $ 23,994 $ 23,994 $ — $ — Restricted cash and cash equivalents 4,647 4,647 — — $ 28,641 $ 28,641 $ — $ — LIABILITIES Contingent consideration related to acquisitions $ 18,367 $ — $ 18,367 $ — $ 18,367 $ — $ 18,367 $ — Balance at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) March 31, ASSETS Cash and cash equivalents (1) $ 27,176 $ 27,176 $ — $ — Restricted cash and cash equivalents 5,320 5,320 — — Marketable securities (2) 9,297 9,297 — — $ 41,793 $ 41,793 $ — $ — LIABILITIES Contingent consideration related to acquisitions $ 23,843 $ — $ — $ 23,843 $ 23,843 $ — $ — $ 23,843 ___________________________________ (1) Cash equivalents consist primarily of money market funds. (2) Marketable securities consist of available-for-sale money market instruments and fixed-income securities, including certificates of deposit, corporate bonds and notes, and municipal securities. The contingent consideration liability as of December 31, 2016 relates to the acquisition of HealthFusion (see Note 3). Prior to December 31, 2016 , we had assessed the fair value of the contingent consideration liability on a recurring basis and any adjustments to fair value subsequent to the measurement period were reflected in the consolidated statements of comprehensive income. Key assumptions included discount rates and probability-adjusted achievement estimates of certain revenue targets that were not observable in the market. The categorization of the framework used to measure fair value of the contingent consideration liability was previously considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. As of the end of the measurement period on December 31, 2016, the actual revenue achievement rate was utilized to compute the ending contingent consideration liability. Accordingly, the contingent consideration liability was transferred into the Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs. The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the nine months ended December 31, 2016 : Total Liabilities Balance at April 1, 2016 $ 23,843 Settlement of contingent consideration related to Mirth (9,273 ) Fair value adjustments 3,797 Transfer of HealthFusion contingent consideration to Level 2 (18,367 ) Balance at December 31, 2016 $ — During the nine months ended December 31, 2016 , we issued shares of common stock to settle $9,273 in contingent consideration liabilities related to the acquisition of Mirth and recorded $3,797 of fair value adjustments to contingent consideration liabilities, of which $3,367 was related to HealthFusion and $430 was related to Mirth. During the three months ended December 31, 2016 , we recorded a benefit of $2,033 for fair value adjustments of contingent consideration liabilities related to HealthFusion. The fair value adjustments to contingent consideration liabilities are included as a component of selling, general and administrative expense in the consolidated statements of comprehensive income. We believe that the fair value of other financial assets and liabilities, including accounts receivable, accounts payable, and line of credit, approximate their respective carrying values due to their nominal credit risk. Non-Recurring Fair Value Measurements We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. During the nine months ended December 31, 2016 , we recorded certain adjustments to HealthFusion goodwill (see Note 3). |
Business Combinations and Dispo
Business Combinations and Dispositions | 9 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Business Combinations and Disposals | Business Combinations HealthFusion Acquisition On January 4, 2016, we completed our acquisition of HealthFusion Holdings, Inc. ("HealthFusion") pursuant to the Agreement and Plan of Merger (the “Merger Agreement"), dated October 30, 2015. HealthFusion provides Web-based, cloud computing software for physicians, medical billing service providers, and hospitals. Its flagship product, MediTouch®, is a fully-integrated, cloud-based software suite consisting of clearinghouse, practice management, electronic health records, and patient portals with rich functionality to enable mobility, workflow automation, and advanced reporting and analytics aimed primarily at small-to-mid-size physician practices. The acquisition of HealthFusion is part of our strategy to expand its client base and cloud-based solution capabilities in the ambulatory market. Over time, we plan to expand the HealthFusion platform to satisfy the needs of practices of increasing size and complexity. The preliminary purchase price totals $183,049 , which includes preliminary working capital and other customary adjustments and the fair value of contingent consideration related to an additional $25,000 of cash in the form of an earnout, subject to HealthFusion achieving certain revenue targets through December 31, 2016. The initial estimated fair value of contingent consideration of $16,700 was based on a Monte Carlo-based valuation model that considered, among other assumptions and inputs, our estimate of projected HealthFusion revenues. As of December 31, 2016 , the fair value of the contingent consideration was $18,367 . The acquisition was initially funded by a draw against the revolving credit agreement (see Note 7), a portion of which was subsequently repaid from existing cash on hand. We accounted for the HealthFusion acquisition as a purchase business combination using the acquisition method of accounting. The preliminary purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as changes to deferred taxes and/or working capital, becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. The preliminary estimated fair value of the acquired tangible and intangible assets and liabilities assumed were determined using multiple valuation approaches depending on the type of tangible or intangible asset acquired, including but not limited to the income approach, the excess earnings method and the relief from royalty method approach. The preliminary amount of goodwill represents the excess of the preliminary purchase price over the preliminary net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of HealthFusion was determined as the excess of the preliminary purchase price over the net acquisition date fair values of the acquired assets and the liabilities assumed, and is not deductible for tax purposes. HealthFusion operates under our Software and Related Solutions segment. During the nine months ended December 31, 2016 , we recorded a $2,949 adjustment to HealthFusion goodwill related to changes in deferred taxes based on the filing of final tax returns. The total preliminary purchase price for the HealthFusion acquisition is summarized as follows: Initial purchase price $ 165,000 Contingent consideration 16,700 Preliminary working capital and other adjustments 1,349 Total preliminary purchase price $ 183,049 January 4, 2016 Preliminary fair value of the net tangible assets acquired and liabilities assumed: Acquired cash and cash equivalents $ 2,225 Accounts receivable, net 1,514 Prepaid expenses and other current assets 4,645 Equipment and improvements, net 767 Capitalized software costs, net 307 Other assets 700 Accounts payable (1,085 ) Accrued compensation and related benefits (533 ) Deferred revenue (1,067 ) Deferred income taxes, net (9,078 ) Other liabilities (2,721 ) Total preliminary net tangible assets acquired and liabilities assumed (4,326 ) Preliminary fair value of identifiable intangible assets acquired: Software technology 42,500 Customer relationships 28,500 Trade name 4,000 Goodwill 112,375 Total preliminary identifiable intangible assets acquired 187,375 Total preliminary purchase price $ 183,049 |
Goodwill
Goodwill | 9 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. We have not identified any events or circumstances as of December 31, 2016 that would require an interim goodwill impairment test. During the nine months ended December 31, 2016 , we recorded certain adjustment to HealthFusion goodwill (see Note 3). We do not amortize goodwill as it has been determined to have an indefinite useful life. We have also determined that the change in reportable operating segments as a result of our ongoing reorganization efforts (see Note 14) did not have a significant impact on the amount of goodwill that is allocated to each reporting unit and each reportable operating segment . Goodwill by reportable operating segment consists of the following: December 31, March 31, Software and Related Solutions $ 153,598 $ 156,547 RCM and Related Services 32,290 32,290 Total goodwill $ 185,888 $ 188,837 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows: December 31, 2016 Customer Relationships Trade Name and Contracts Software Technology Total Gross carrying amount $ 50,550 $ 5,480 $ 67,810 $ 123,840 Accumulated amortization (26,693 ) (1,821 ) (20,604 ) (49,118 ) Net intangible assets $ 23,857 $ 3,659 $ 47,206 $ 74,722 March 31, 2016 Customer Relationships Trade Name and Contracts Software Technology Total Gross carrying amount $ 50,550 $ 7,368 $ 67,810 $ 125,728 Accumulated amortization (19,618 ) (2,895 ) (11,540 ) (34,053 ) Net intangible assets $ 30,932 $ 4,473 $ 56,270 $ 91,675 Amortization expense related to customer relationships and trade name and contracts recorded as operating expenses in the consolidated statements of comprehensive income was $2,568 and $898 for the three months ended December 31, 2016 and 2015 , respectively. Amortization expense related to software technology recorded as cost of revenue was $3,007 and $903 for the three months ended December 31, 2016 and 2015 , respectively. Amortization expense related to customer relationships and trade name and contracts recorded as operating expenses in the consolidated statements of comprehensive income was $7,889 and $2,692 for the nine months ended December 31, 2016 and 2015 , respectively. Amortization expense related to software technology recorded as cost of revenue was $9,064 and $2,710 for the nine months ended December 31, 2016 and 2015 , respectively. The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of December 31, 2016 : Amortization Expense Recorded As: Operating Expense Cost of Revenue Total For the year ended March 31, 2017 (remaining three months) 2,527 2,963 5,490 2018 7,264 11,851 19,115 2019 4,852 11,851 16,703 2020 3,855 11,851 15,706 2021 3,006 7,968 10,974 2022 and beyond 6,012 722 6,734 Total $ 27,516 $ 47,206 $ 74,722 |
Capitalized Software Costs
Capitalized Software Costs | 9 Months Ended |
Dec. 31, 2016 | |
Research and Development [Abstract] | |
Capitalized Software Costs | Capitalized Software Costs Our capitalized software costs are summarized as follows: December 31, March 31, Gross carrying amount $ 103,070 $ 96,699 Accumulated amortization (90,075 ) (83,449 ) Net capitalized software costs $ 12,995 $ 13,250 Amortization expense related to capitalized software costs was $1,807 and $2,499 for the three months ended December 31, 2016 and 2015 , respectively, and is recorded as cost of revenue in the consolidated statements of comprehensive income. Amortization expense related to capitalized software costs was $6,626 and $7,428 for the nine months ended December 31, 2016 and 2015 , respectively. The following table presents the remaining estimated amortization of capitalized software costs as of December 31, 2016 . The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates. For the year ended March 31, 2017 (remaining three months) $ 1,500 2018 5,300 2019 4,300 2020 1,895 Total $ 12,995 |
Line of Credit (Notes)
Line of Credit (Notes) | 9 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
LIne of Credit | Line of Credit On January 4, 2016, we entered into a $250,000 revolving credit agreement (“Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association, as syndication agent, and certain other lenders. The Credit Agreement is secured by substantially all of our existing and future property and material domestic subsidiaries. The Credit Agreement provides a subfacility of up to $10,000 for letters of credit and a subfacility of up to $10,000 for swing-line loans. The Credit Agreement matures on January 4, 2021 and the full balance of the revolving loans and all other obligations under the agreement must be paid at that time. The revolving loans under the Credit Agreement will be available for letters of credit, working capital and general corporate purposes. We were in compliance with all covenants under the Credit Agreement as of December 31, 2016 . As of December 31, 2016 , we had $25,000 in outstanding loans and $225,000 of unused credit under the Credit Agreement. During the three months ended December 31, 2016 , we recorded $359 of interest expense and $269 in amortization of deferred debt issuance costs related to the Credit Agreement. During the nine months ended December 31, 2016 , we recorded $1,631 of interest expense and $807 in amortization of deferred debt issuance costs related to the Credit Agreement. |
Composition of Certain Financia
Composition of Certain Financial Statement Captions | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions Accounts receivable may include amounts invoiced for undelivered products and services at each period end. Undelivered products and services are included as a component of the deferred revenue balance on the accompanying consolidated balance sheets. December 31, March 31, Accounts receivable, gross $ 86,388 $ 104,467 Sales return reserve (8,623 ) (7,541 ) Allowance for doubtful accounts (2,249 ) (2,902 ) Accounts receivable, net $ 75,516 $ 94,024 Inventory is comprised of computer systems and components. Prepaid expenses and other current assets are summarized as follows: December 31, March 31, Prepaid expenses $ 13,448 $ 11,804 Other current assets 2,496 3,106 Prepaid expenses and other current assets $ 15,944 $ 14,910 Equipment and improvements are summarized as follows: December 31, March 31, Computer equipment $ 21,483 $ 32,213 Internal-use software 10,899 10,201 Furniture and fixtures 10,561 9,799 Leasehold improvements 16,538 13,408 Equipment and improvements, gross 59,481 65,621 Accumulated depreciation and amortization (33,384 ) (39,831 ) Equipment and improvements, net $ 26,097 $ 25,790 The current portion of deferred revenues are summarized as follows: December 31, March 31, Professional services $ 22,005 $ 23,128 Software license, hardware and other 10,469 14,913 Support and maintenance 8,948 11,902 Software related subscription services 8,341 7,992 Deferred revenue $ 49,763 $ 57,935 Accrued compensation and related benefits are summarized as follows: December 31, March 31, Payroll, bonus and commission $ 10,617 $ 9,683 Vacation 8,003 8,987 Accrued compensation and related benefits $ 18,620 $ 18,670 Other current and noncurrent liabilities are summarized as follows: December 31, March 31, Contingent consideration and other liabilities related to acquisitions $ 18,367 $ 24,153 Care services liabilities 4,647 5,339 Customer credit balances and deposits 3,973 4,123 Accrued EDI expense 2,270 2,604 Accrued consulting and outside services 2,194 3,650 Accrued self insurance expense 1,898 1,862 Accrued outsourcing costs 1,613 1,604 Deferred rent 1,409 828 Accrued legal expense 758 864 Accrued royalties 740 2,341 Employee benefit plan withholdings 639 213 Sales tax payable 333 655 Other accrued expenses 5,497 2,002 Other current liabilities $ 44,338 $ 50,238 Deferred rent $ 9,538 $ 6,577 Uncertain tax position and related liabilities 4,729 4,084 Other noncurrent liabilities $ 14,267 $ 10,661 |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three months ended December 31, 2016 was $2,342 and the provision for income taxes for the three months ended December 31, 2015 was $1,141 . The effective tax rates were 18.3% and 13.5% for the three months ended December 31, 2016 and 2015 , respectively. The effective rate for the three months ended December 31, 2016 increased compared to the prior year period primarily due to the impact of lower qualifying production activity deductions in the current period, certain non-deductible acquisition-related costs, and a discrete valuation allowance, offset by federal and state research and development credit and other discrete adjustments. The provision for income taxes for the nine months ended December 31, 2016 was $3,950 and the provision for income taxes for the nine months ended December 31, 2015 was $8,233 . The effective tax rates were 22.2% and 27.3% for the nine months ended December 31, 2016 and 2015 , respectively. The effective rate for the nine months ended December 31, 2016 decreased compared to the prior year period primarily due to favorable discrete adjustments for federal and state research and development credit, offset by non-deductible acquisition-related costs, lower qualifying production activity deductions in the current period, and other discrete adjustments. The deferred tax assets and liabilities have been shown net in the accompanying consolidated balance sheets as noncurrent. We expect to receive the full benefit of the deferred tax assets recorded with the exception of certain state credits, state net operating loss carryforwards, and foreign accumulated minimum tax credits, for which we have recorded a valuation allowance. Uncertain tax positions We had liabilities of $4,729 and $4,084 for unrecognized tax benefits related to various federal, state and local income tax matters as of December 31, 2016 and March 31, 2016 , respectively. If recognized, this amount would reduce our effective tax rate. We are no longer subject to U.S. federal income tax examinations for tax years before 2013. With few exceptions, we are no longer subject to state income tax examinations for tax years before 2012. We do not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months . |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per Share The dual presentation of “basic” and “diluted” earnings per share is provided below. Share amounts below are in thousands. Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Earnings per share — Basic: Net income $ 10,486 $ 7,302 $ 13,826 $ 21,979 Weighted-average shares outstanding — Basic 62,093 60,867 61,645 60,548 Net income per common share — Basic $ 0.17 $ 0.12 $ 0.22 $ 0.36 Earnings per share — Diluted: Net income $ 10,486 $ 7,302 $ 13,826 $ 21,979 Weighted-average shares outstanding 62,093 60,867 61,645 60,548 Effect of potentially dilutive securities — 412 255 642 Weighted-average shares outstanding — Diluted 62,093 61,279 61,900 61,190 Net income per common share — Diluted $ 0.17 $ 0.12 $ 0.22 $ 0.36 The computation of diluted net income per share does not include 3,054 and 3,015 options to acquire shares of common stock for the three and nine months ended December 31, 2016 , respectively, because their inclusion would have an anti-dilutive effect on net income per share. The computation of diluted net income per share does not include 1,839 and 1,789 options to acquire shares of common stock for the three and nine months ended December 31, 2015 , respectively, because their inclusion would have an anti-dilutive effect on net income per share. |
Share-Based Awards
Share-Based Awards | 9 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Awards | Share-Based Awards Employee Stock Option and Incentive Plans In October 2005, our shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 4,800,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that our employees and directors may, at the discretion of the Board of Directors ("Board") or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the 2005 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the 2005 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the 2005 Plan, awards under the 2005 Plan will fully vest under certain circumstances. The 2005 Plan expired on May 25, 2015. As of December 31, 2016 , there were 969,565 outstanding options and 567 outstanding shares of restricted stock awards under the 2005 Plan. In August 2015, our shareholders approved a stock option and incentive plan (the “2015 Plan”) under which 11,500,000 shares of common stock were reserved for the issuance of awards, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards, performance stock awards and other share-based awards. The 2015 Plan provides that our employees and directors may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted certain share-based awards. In the case of option awards granted under the 2015 Plan, the exercise price of each option is determined based on the date of grant and expire no later than 10 years from the date of grant. Awards granted pursuant to the 2015 Plan are subject to the vesting schedule or performance metrics set forth in the agreements pursuant to which they are granted. Upon a change of control of our Company, as such term is defined in the 2015 Plan, awards under the 2015 Plan will fully vest under certain circumstances. As of December 31, 2016 , there were 1,994,750 outstanding options, 933,165 outstanding shares of restricted stock awards, 123,082 outstanding shares of performance stock awards, and 8,079,983 shares available for future grant under the 2015 Plan. The following table summarizes the stock option transactions during the nine months ended December 31, 2016 : Number of Shares Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding, April 1, 2016 2,447,286 $ 19.55 6.3 $ 574 Granted 1,056,500 12.82 7.4 Forfeited/Canceled (539,471 ) 22.13 4.7 Outstanding, December 31, 2016 2,964,315 $ 16.68 6.4 $ 377 Vested and expected to vest, September 30, 2016 2,652,038 $ 16.93 6.3 $ 329 Exercisable, December 31, 2016 586,120 $ 25.05 3.9 $ 11 We utilize the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions: Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Expected term 6.3 years 3.9 years 6.0 - 6.6 years 3.8 - 3.9 years Expected volatility 37.1% 38.9% 36.9% - 37.4% 38.3% - 38.9% Expected dividends —% 5.3% —% 4.1% - 5.3% Risk-free rate 1.5% 1.3% 1.2% - 1.5% 1.3% - 1.6% The weighted-average grant date fair value of stock options granted during the nine months ended December 31, 2016 and 2015 was $4.92 and $3.33 per share, respectively. During the nine months ended December 31, 2016 , a total of 1,056,500 options to purchase shares of common stock were granted under the 2015 Plan at an exercise price equal to the market price of our common stock on the date of grant, as summarized below: Option Grant Date Number of Shares Exercise Price Vesting Terms (1) Expiration November 1, 2016 50,000 $ 12.71 Four years November 1, 2024 July 11, 2016 150,000 $ 12.60 Four years July 11, 2024 May 31, 2016 100,000 $ 12.71 Five years May 31, 2024 May 25, 2016 216,500 $ 12.78 Four years May 25, 2024 May 24, 2016 540,000 $ 12.93 Four years May 24, 2024 Fiscal year 2017 grants 1,056,500 __________________________________ (1) Options vest in equal annual installments on each grant anniversary date commencing one year following the date of grant. Non-vested stock option award activity during the nine months ended December 31, 2016 is summarized as follows: Non-Vested Number of Shares Weighted- Average Grant-Date Fair Value per Share Outstanding, April 1, 2016 1,859,750 $ 4.67 Granted 1,056,500 4.92 Vested (276,595 ) 4.30 Forfeited/Canceled (261,460 ) 4.38 Outstanding, December 31, 2016 2,378,195 $ 4.72 As of December 31, 2016 , $8,662 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of 3.2 years. This amount does not include the cost of new options that may be granted in future periods or any changes in our forfeiture percentage. The total fair value of options vested during the nine months ended December 31, 2016 and 2015 was $1,189 and $1,564 , respectively. Restricted stock awards activity during the nine months ended December 31, 2016 is summarized as follows: Number of Shares Weighted- Average Grant-Date Fair Value per Share Outstanding, April 1, 2016 191,247 $ 14.44 Granted 857,456 12.81 Vested (68,309 ) 14.29 Canceled (46,662 ) 12.78 Outstanding, December 31, 2016 933,732 $ 12.80 Share-based compensation expense related to restricted stock awards was $1,054 and $249 for the three months ended December 31, 2016 and 2015 , respectively. Share-based compensation expense related to restricted stock awards was $2,571 and $664 for the nine months ended December 31, 2016 and 2015 , respectively. The weighted-average grant date fair value for the restricted stock awards was estimated using the market price of the common stock on the date of grant. The fair value of the restricted stock awards is amortized on a straight-line basis over the vesting period, which is generally two years. As of December 31, 2016 , $9,930 of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of 2.2 years. This amount does not include the cost of new restricted stock awards that may be granted in future periods. On December 29, 2016, the Compensation Committee of the Board granted 123,082 performance stock awards to certain executive officers. The performance stock awards vest in four equal increments on each of the first four anniversaries of the grant date, subject in each case to the executive officer’s continued service and achievement of certain Company performance goals, including strong Company stock price performance. Share-based compensation expense related to the performance stock awards was not significant for the three and nine months ended December 31, 2016 . Employee Share Purchase Plan On August 11, 2014, our shareholders approved an Employee Share Purchase Plan (the “Purchase Plan”) under which 4,000,000 shares of common stock were reserved for future grant. The Purchase Plan allows eligible employees to purchase shares through payroll deductions of up to 15% of total base salary at a price equal to 90% of the lower of the fair market values of the shares as of the beginning or the end of the corresponding offering period. Any shares purchased under the Purchase Plan are subject to a six-month holding period. Employees are limited to purchasing no more than 1,500 shares on any single purchase date and no more than $25,000 in total fair market value of shares during any one calendar year. As of December 31, 2016 , we have issued 209,876 shares under the Purchase Plan and 3,790,124 shares are available for future issuance. Share-based compensation expense recorded for the employee share purchase plan was $70 and $70 for the three months ended December 31, 2016 and 2015 , respectively. Share-based compensation expense recorded for the employee share purchase plan was $277 and $216 for the nine months ended December 31, 2016 and 2015 , respectively. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Concentration of Credit Risk We had cash deposits at U.S. banks and financial institutions which exceeded federally insured limits at December 31, 2016 . We are exposed to credit loss for amounts in excess of insured limits in the event of non-performance by the institutions; however, we do not anticipate non-performance by these institutions. |
Commitments, Guarantees and Con
Commitments, Guarantees and Contingencies | 9 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Guarantees and Contingencies | Commitments, Guarantees and Contingencies Commitments and Guarantees Our software license agreements include a performance guarantee that our software products will substantially operate as described in the applicable program documentation for a period of 365 days after delivery. To date, we have not incurred any significant costs associated with our performance guarantee or other related warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. Certain arrangements also include performance guarantees related to response time, availability for operational use, and other performance-related guarantees. Certain arrangements also include penalties in the form of maintenance credits should the performance of the software fail to meet the performance guarantees. To date, we have not incurred any significant costs associated with these warranties and do not expect to incur significant warranty costs in the future. Therefore, no accrual has been made for potential costs associated with these warranties. We have historically offered short-term rights of return in certain sales arrangements. If we are able to estimate returns for these types of arrangements and all other criteria for revenue recognition have been met, revenue is recognized and these arrangements are recorded in the consolidated financial statements. If we are unable to estimate returns for these types of arrangements, revenue is not recognized in the consolidated financial statements until the rights of return expire, provided also, that all other criteria of revenue recognition have been met. Our standard sales agreements contain an indemnification provision pursuant to which we shall indemnify, hold harmless, and reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any United States patent, any copyright or other intellectual property infringement claim by any third-party with respect to our software. As we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification agreements, we believe that our estimated exposure on these agreements is currently minimal. Accordingly, we have no liabilities recorded for these indemnification obligations. Hussein Litigation On October 7, 2013, a complaint was filed against our Company and certain of our officers and directors in the Superior Court of the State of California for the County of Orange, captioned Ahmed D. Hussein v. Sheldon Razin, Steven Plochocki, Quality Systems, Inc. and Does 1-10, inclusive, No. 30-2013-00679600-CU-NP-CJC, by Ahmed Hussein, a former director and significant shareholder of our Company. We filed a demurrer to the complaint, which the Court granted on April 10, 2014. An amended complaint was filed on April 25, 2014. The amended complaint generally alleges fraud and deceit, constructive fraud, negligent misrepresentation and breach of fiduciary duty in connection with statements made to our shareholders regarding our financial condition and projected future performance. The amended complaint seeks actual damages, exemplary and punitive damages and costs. We filed a demurrer to the amended complaint. On July 29, 2014, the Court sustained the demurrer with respect to the breach of fiduciary duty claim, and overruled the demurrer with respect to the fraud and deceit claims. On August 28, 2014, we filed an answer and also filed a cross-complaint against the plaintiff, alleging that the plaintiff breached fiduciary duties owed to the Company, Mr. Razin and Mr. Plochocki. Mr. Razin and Mr. Plochocki have dismissed their claims against Hussein, leaving QSI as the sole plaintiff in the cross-complaint. On June 26, 2015, we filed a motion for summary judgment, which the Court granted on September 16, 2015, dismissing all claims against us. On September 23, 2015, the plaintiff filed an application for reconsideration of the Court's summary judgment order, which the Court denied. On October 28, 2015, the plaintiff filed a motion for summary judgment, seeking to dismiss our cross-complaint, which the Court denied on March 3, 2016. On May 9, 2016, the plaintiff filed a motion for summary adjudication, seeking to again dismiss our cross-complaint, which the Court denied on August 5, 2016. On August 5, 2016, the plaintiff filed a motion for judgment on the pleadings, seeking to again dismiss our cross-complaint, which the Court denied on September 2, 2016. Trial is set for April 10, 2017 on QSI's cross-complaint. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. Federal Securities Class Action On November 19, 2013, a putative class action complaint was filed on behalf of the shareholders of our Company other than the defendants against us and certain of our officers and directors in the United States District Court for the Central District of California by one of our shareholders. After the Court appointed lead plaintiffs and lead counsel for this action, and recaptioned the action In re Quality Systems, Inc. Securities Litigation, No. 8L13-cv-01818-CJC(JPRx), lead plaintiffs filed an amended complaint on April 7, 2014. The amended complaint, which is substantially similar to the litigation described above under the caption “Hussein Litigation,” generally alleges that statements made to our shareholders regarding our financial condition and projected future performance were false and misleading in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the individual defendants are liable for such statements because they are controlling persons under Section 20(a) of the Exchange Act. The complaint seeks compensatory damages, court costs and attorneys' fees. We filed a motion to dismiss the amended complaint on June 20, 2014, which the Court granted on October 20, 2014, dismissing the complaint with prejudice. Plaintiffs filed a motion for reconsideration of the Court's order, which the Court denied on January 5, 2015. On January 30, 2015, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit, captioned In re Quality Systems, Inc. Securities Litigation, No. 15-55173. Plaintiffs filed their opening brief and we answered. Oral argument was held on December 5, 2016. The Court's decision remains pending. We believe that the plaintiffs' claims are without merit and continue to defend against them vigorously. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. Shareholder Derivative Litigation On January 24, 2014, a complaint was filed against our Company and certain of our officers and current and former directors in the United States District Court for the Central District of California, captioned Timothy J. Foss, derivatively on behalf of himself and all others similarly situated, vs. Craig A. Barbarosh, George H. Bristol, James C. Malone, Peter M. Neupert, Morris Panner, D. Russell Pflueger, Steven T. Plochocki, Sheldon Razin, Lance E. Rosenzweig and Quality Systems, Inc., No. SACV14-00110-DOC-JPPx, by Timothy J. Foss, a shareholder of ours. The complaint arises from the same allegations described above under the captions “Hussein Litigation” and “Federal Securities Class Action” and generally alleges breach of fiduciary duties, abuse of control and gross mismanagement by our directors, in addition to unjust enrichment and insider selling by individual directors. The complaint seeks compensatory damages, restitution and disgorgement of all profits, court costs, attorneys’ fees and implementation of enhanced corporate governance procedures. The parties have agreed to stay this litigation until the United States Court of Appeals for the Ninth Circuit issues a ruling on the pending appeal described above under the caption “Federal Securities Class Action”. We believe that the plaintiff’s claims are without merit and intend to defend against them vigorously. At this time, we are unable to estimate the probability or the amount of liability, if any, related to this claim. |
Operating Segment Information
Operating Segment Information | 9 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Operating Segment Information | Operating Segment Information Effective July 1, 2016, we revised our reportable operating segments. As part of our ongoing reorganization efforts, we refined the measurement of our segment data to better reflect our current internal organizational structure whereby certain functions that formerly existed within each individual operating segment have changed. Our operating segments now consist of the Software and Related Solutions segment and the RCM and Related Services segment, which is consistent with the disaggregated financial information used and evaluated by our chief operating decision maker (consisting of our Chief Executive Officer) to assess performance and make decisions about the allocation of resources. Revenue and gross profit are the key measures of segment profitability used by our chief operating decision maker to measure segment operating performance and to make key business decisions. The revenues and gross profit of each segment are derived from distinct product and services within each segment. The Software and Related Solutions segment aggregates the revenues and gross profit of our software-related products and services, including software license and hardware, software-related subscription services, support and maintenance, EDI and data services, and certain professional services, such as implementation, training, and consulting. The RCM and Related Services segment aggregates the revenues and gross profit of our RCM services and certain related ancillary service offerings. Certain functional roles that do not engage in revenue generating activities, such as product solutions and strategy, research and development, and certain corporate general and administrative functions, including finance, human resources, marketing, and legal, are considered to be shared-services and are not controlled by segment-level leadership. Although the segments may derive direct benefits as a result of such shared-services functions, our chief operating decision maker evaluates performance based upon stand-alone segment revenues and gross profit. Accordingly, the shared-services functions are not considered separate operating segments, and the related operating expenses are not included within our operating segments disclosure. Additionally, total assets are managed at a consolidated level and thus are also not included within our operating segments disclosure. Accounting policies for each of our operating segments are the same as those applied to our consolidated financial statements. Operating segment data for the three and nine months ended December 31, 2016 and 2015 is summarized in the table below. Prior period data has been retroactively reclassified to present all segment information on a comparable basis. The change in reportable segments has no impact to consolidated revenues and consolidated cost of revenue, nor does it affect our presentation of revenue and cost of revenue on the consolidated statements of comprehensive income. Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Revenue: Software and Related Solutions $ 106,958 $ 93,927 $ 312,854 $ 291,783 RCM and Related Services 20,910 22,486 64,385 65,313 Hospital Solutions (1) — 619 — 7,469 Consolidated revenue $ 127,868 $ 117,032 $ 377,239 $ 364,565 Gross profit (loss): Software and Related Solutions $ 71,252 $ 58,949 $ 204,414 $ 184,982 RCM and Related Services 7,077 7,769 21,337 20,792 Hospital Solutions (1) — (69 ) — 2,569 Unallocated cost of revenue (2) (4,813 ) (3,402 ) (15,676 ) (10,138 ) Consolidated gross profit $ 73,516 $ 63,247 $ 210,075 $ 198,205 ___________________________________ (1) The former Hospital Solutions Division was divested in October 2015 and therefore, does not represent a distinct operating segment. Historical amounts for Hospital Solutions have not been revised. (2) Consists of amortization of acquired software technology and amortization of capitalized software costs not allocated to the operating segments for the purposes of measuring performance. |
Restructuring Plan
Restructuring Plan | 9 Months Ended |
Dec. 31, 2016 | |
Restructuring Costs [Abstract] | |
Restructuring Plan | Restructuring Plan In fiscal year 2016, we initiated a three-phase plan intended to better position our organization for future success. We implemented a series of actions with the objective of achieving greater synergies and further integration of our products and services in support of our business strategies, and enabling a more efficient, integrated and client-centered delivery of the holistic solutions that we believe is required by our ambulatory care clients. We also transformed our management team with the appointment of a new chief executive officer, chief financial officer, chief technology officer, chief strategy officer, and chief client officer. In the first phase, we redesigned the organization to more effectively support the execution of our strategy. Under phase two of our reorganization, we will continue to build our infrastructure and enhance our healthcare information technology capabilities to drive future revenue growth. The third phase of the plan will consist of developing and marketing the services and solutions that we believe will accelerate revenue growth. The overall plan also includes a multi-year initiative, called NextGen 2.0, to merge our business units into a more streamlined, functional-based organization structure and to realign our organizational structure by consolidating the sales, marketing, information services, and software development responsibilities into single, company-wide roles in order to achieve greater efficiency. As a result, our reportable segments have changed and may change again due to such changes in the organization of our business. The first phase was completed in April 2016, when we announced a corporate restructuring plan, which was approved by our Board of Directors. During the three and nine months ended December 31, 2016 , we recorded $231 and $4,685 , respectively, of restructuring costs within operating expenses in our consolidated statements of comprehensive income. The restructuring costs consist primarily of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, which were accrued when it was probable that the benefits will be paid and the amount were reasonably estimable. The remaining restructuring liability as of December 31, 2016 was not significant. The restructuring plan is expected to be complete by the end of fiscal 2017. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation. The consolidated financial statements include the accounts of Quality Systems, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated. |
Basis of Presentation | Basis of Presentation. The accompanying unaudited consolidated financial statements as of December 31, 2016 and for the three and nine months ended December 31, 2016 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 . In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. References to amounts in the consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified. |
Recent Accounting Standards | Recent Accounting Standards. Recent accounting pronouncements requiring implementation in future periods are discussed below or in the notes, where applicable. In November 2016, the FASB issued Accounting Standards Update ("ASU") 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 provides guidance on the classification of restricted cash and cash equivalents in the statement of cash flows. Although it does not provide a definition of restricted cash or restricted cash equivalents, it states that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-18 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-16 is effective for us in the first quarter of fiscal 2019, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add and clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flows to eliminate diversity in practice related to how such cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. ASU 2016-15 is effective for us in the first quarter of fiscal 2019, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for and reporting on share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The amendments in this update are to be applied differently upon adoption with certain amendments being applied prospectively, retrospectively and under a modified retrospective transition method. We expect to adopt ASU 2016-09 in the first quarter of fiscal 2018, and we do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. We are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Arrangement ("ASU 2015-05"), which requires a customer to determine whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software or as a service contract. ASU 2015-05 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. Upon adoption, an entity has the option to apply the provisions of ASU 2015-05 either prospectively to all arrangements entered into or materially modified, or retrospectively. The adoption of this new standard did not have material impact on our consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ("ASU 2014-15"), which incorporates and expands upon certain principles that currently exist in U.S. auditing standards. ASU 2014-15 provides guidance regarding management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. The new standard requires management to perform interim and annual evaluations and sets forth principles for considering the mitigating effect of management's plans. The standard mandates certain disclosures when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date. ASU 2014-15 is effective for us commencing fiscal year ending March 31, 2017. The adoption of this new standard has not had, and is not expected to have, an impact on our consolidated financial statements . In May 2014, the FASB, along with the International Accounting Standards Board, issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards and GAAP. The core principle of this updated guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosure about revenue and provides improved guidance for multiple element arrangements. In July 2015 decision, the FASB issued ASU 2015-14, Deferral of Effective Date ("ASU 2015-14") to delay the effective date by one year. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) –Principal versus Agent Consideration ("ASU 2016-08"). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing ("ASU 2016-10”). In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) – Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16 ("ASU 2016-11") and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) –Narrow Scope Improvements and Practical Expedients ("ASU 2016-12"). The new ASUs do not change the core principle of the guidance in Topic 606 (as amended by ASU 2014-09), but rather help to provide further interpretive clarifications on the new guidance in ASU 2014-09. ASU 2014-09, as amended by ASU 2015-14, is effective for us in the first quarter of fiscal 2019. Companies are permitted to adopt this new guidance following either a full retrospective or modified retrospective approach. We have established a cross-functional team to assess the potential impact of the new revenue standard. Our assessment process consists of reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our revenue contracts and identifying appropriate changes to our business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. Our initial assessment of the impact of the new revenue standard on our current business processes, systems and controls are expected to be completed during fiscal 2017. Additionally, we are currently evaluating the potential impact that the implementation of this new revenue standard will have on our consolidated financial statements as well as selection of the method of adoption. We currently do not expect to implement this new standard prior to the required effective date. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements. |
Contingent Consideration Policy | December 31, 2016 relates to the acquisition of HealthFusion (see Note 3). Prior to December 31, 2016 , we had assessed the fair value of the contingent consideration liability on a recurring basis and any adjustments to fair value subsequent to the measurement period were reflected in the consolidated statements of comprehensive income. Key assumptions included discount rates and probability-adjusted achievement estimates of certain revenue targets that were not observable in the market. The categorization of the framework used to measure fair value of the contingent consideration liability was previously considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. As of the end of the measurement period on December 31, 2016, the actual revenue achievement rate was utilized to compute the ending contingent consideration liability. Accordingly, the contingent consideration liability was transferred into the Level 2 valuation hierarchy because the fair value was determined based on other significant observable inputs. |
Non-Recurring Fair Value Measurements | Non-Recurring Fair Value Measurements We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Stock-based compensation expense | Share-Based Compensation. The following table shows total share-based compensation expense included in the consolidated statements of comprehensive income for the three and nine months ended December 31, 2016 and 2015 : Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Costs and expenses: Cost of revenue $ 144 $ 101 $ 459 $ 300 Research and development costs, net 273 67 690 280 Selling, general and administrative 1,584 575 4,028 1,748 Total share-based compensation 2,001 743 5,177 2,328 Income tax benefit (718 ) (225 ) (1,825 ) (701 ) Decrease in net income $ 1,283 $ 518 $ 3,352 $ 1,627 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair value of assets and liabilities on a recurring basis | The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, 2016 and March 31, 2016 : Balance at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) December 31, ASSETS Cash and cash equivalents (1) $ 23,994 $ 23,994 $ — $ — Restricted cash and cash equivalents 4,647 4,647 — — $ 28,641 $ 28,641 $ — $ — LIABILITIES Contingent consideration related to acquisitions $ 18,367 $ — $ 18,367 $ — $ 18,367 $ — $ 18,367 $ — Balance at Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) March 31, ASSETS Cash and cash equivalents (1) $ 27,176 $ 27,176 $ — $ — Restricted cash and cash equivalents 5,320 5,320 — — Marketable securities (2) 9,297 9,297 — — $ 41,793 $ 41,793 $ — $ — LIABILITIES Contingent consideration related to acquisitions $ 23,843 $ — $ — $ 23,843 $ 23,843 $ — $ — $ 23,843 ___________________________________ (1) Cash equivalents consist primarily of money market funds. (2) Marketable securities consist of available-for-sale money market instruments and fixed-income securities, including certificates of deposit, corporate bonds and notes, and municipal securities. |
Company's assets and liabilities measured at fair value using significant unobservable inputs (Level 3) | The following table presents activity in our financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3), as of and for the nine months ended December 31, 2016 : Total Liabilities Balance at April 1, 2016 $ 23,843 Settlement of contingent consideration related to Mirth (9,273 ) Fair value adjustments 3,797 Transfer of HealthFusion contingent consideration to Level 2 (18,367 ) Balance at December 31, 2016 $ — |
Business Combinations and Dis24
Business Combinations and Dispositions (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | Initial purchase price $ 165,000 Contingent consideration 16,700 Preliminary working capital and other adjustments 1,349 Total preliminary purchase price $ 183,049 |
Summary of purchase price allocation | January 4, 2016 Preliminary fair value of the net tangible assets acquired and liabilities assumed: Acquired cash and cash equivalents $ 2,225 Accounts receivable, net 1,514 Prepaid expenses and other current assets 4,645 Equipment and improvements, net 767 Capitalized software costs, net 307 Other assets 700 Accounts payable (1,085 ) Accrued compensation and related benefits (533 ) Deferred revenue (1,067 ) Deferred income taxes, net (9,078 ) Other liabilities (2,721 ) Total preliminary net tangible assets acquired and liabilities assumed (4,326 ) Preliminary fair value of identifiable intangible assets acquired: Software technology 42,500 Customer relationships 28,500 Trade name 4,000 Goodwill 112,375 Total preliminary identifiable intangible assets acquired 187,375 Total preliminary purchase price $ 183,049 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | Goodwill by reportable operating segment consists of the following: December 31, March 31, Software and Related Solutions $ 153,598 $ 156,547 RCM and Related Services 32,290 32,290 Total goodwill $ 185,888 $ 188,837 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets, other than capitalized software development costs | Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows: December 31, 2016 Customer Relationships Trade Name and Contracts Software Technology Total Gross carrying amount $ 50,550 $ 5,480 $ 67,810 $ 123,840 Accumulated amortization (26,693 ) (1,821 ) (20,604 ) (49,118 ) Net intangible assets $ 23,857 $ 3,659 $ 47,206 $ 74,722 March 31, 2016 Customer Relationships Trade Name and Contracts Software Technology Total Gross carrying amount $ 50,550 $ 7,368 $ 67,810 $ 125,728 Accumulated amortization (19,618 ) (2,895 ) (11,540 ) (34,053 ) Net intangible assets $ 30,932 $ 4,473 $ 56,270 $ 91,675 |
Estimated amortization of intangible assets with determinable lives | The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of December 31, 2016 : Amortization Expense Recorded As: Operating Expense Cost of Revenue Total For the year ended March 31, 2017 (remaining three months) 2,527 2,963 5,490 2018 7,264 11,851 19,115 2019 4,852 11,851 16,703 2020 3,855 11,851 15,706 2021 3,006 7,968 10,974 2022 and beyond 6,012 722 6,734 Total $ 27,516 $ 47,206 $ 74,722 |
Capitalized Software Costs (Tab
Capitalized Software Costs (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Research and Development [Abstract] | |
Capitalized software development costs | Our capitalized software costs are summarized as follows: December 31, March 31, Gross carrying amount $ 103,070 $ 96,699 Accumulated amortization (90,075 ) (83,449 ) Net capitalized software costs $ 12,995 $ 13,250 |
Estimated amortization of capitalized software costs | The following table presents the remaining estimated amortization of capitalized software costs as of December 31, 2016 . The estimated amortization is comprised of (i) amortization of released products and (ii) the expected amortization for products that are not yet available for sale based on their estimated economic lives and projected general release dates. For the year ended March 31, 2017 (remaining three months) $ 1,500 2018 5,300 2019 4,300 2020 1,895 Total $ 12,995 |
Composition of Certain Financ28
Composition of Certain Financial Statement Captions (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Accounts Receivable | December 31, March 31, Accounts receivable, gross $ 86,388 $ 104,467 Sales return reserve (8,623 ) (7,541 ) Allowance for doubtful accounts (2,249 ) (2,902 ) Accounts receivable, net $ 75,516 $ 94,024 |
Summary of Inventories | Inventory is comprised of computer systems and components. |
Summary of Prepaid Expense and Other Assets, Current | Prepaid expenses and other current assets are summarized as follows: December 31, March 31, Prepaid expenses $ 13,448 $ 11,804 Other current assets 2,496 3,106 Prepaid expenses and other current assets $ 15,944 $ 14,910 |
Summary of Equipment and improvements | Equipment and improvements are summarized as follows: December 31, March 31, Computer equipment $ 21,483 $ 32,213 Internal-use software 10,899 10,201 Furniture and fixtures 10,561 9,799 Leasehold improvements 16,538 13,408 Equipment and improvements, gross 59,481 65,621 Accumulated depreciation and amortization (33,384 ) (39,831 ) Equipment and improvements, net $ 26,097 $ 25,790 |
Summary of Current and non-current deferred revenue | The current portion of deferred revenues are summarized as follows: December 31, March 31, Professional services $ 22,005 $ 23,128 Software license, hardware and other 10,469 14,913 Support and maintenance 8,948 11,902 Software related subscription services 8,341 7,992 Deferred revenue $ 49,763 $ 57,935 |
Summary of Accrued compensation and related benefits | Accrued compensation and related benefits are summarized as follows: December 31, March 31, Payroll, bonus and commission $ 10,617 $ 9,683 Vacation 8,003 8,987 Accrued compensation and related benefits $ 18,620 $ 18,670 |
Summary of Other current liabilities | Other current and noncurrent liabilities are summarized as follows: December 31, March 31, Contingent consideration and other liabilities related to acquisitions $ 18,367 $ 24,153 Care services liabilities 4,647 5,339 Customer credit balances and deposits 3,973 4,123 Accrued EDI expense 2,270 2,604 Accrued consulting and outside services 2,194 3,650 Accrued self insurance expense 1,898 1,862 Accrued outsourcing costs 1,613 1,604 Deferred rent 1,409 828 Accrued legal expense 758 864 Accrued royalties 740 2,341 Employee benefit plan withholdings 639 213 Sales tax payable 333 655 Other accrued expenses 5,497 2,002 Other current liabilities $ 44,338 $ 50,238 Deferred rent $ 9,538 $ 6,577 Uncertain tax position and related liabilities 4,729 4,084 Other noncurrent liabilities $ 14,267 $ 10,661 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Weighted-average shares outstanding for basic and diluted net income per share | The dual presentation of “basic” and “diluted” earnings per share is provided below. Share amounts below are in thousands. Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Earnings per share — Basic: Net income $ 10,486 $ 7,302 $ 13,826 $ 21,979 Weighted-average shares outstanding — Basic 62,093 60,867 61,645 60,548 Net income per common share — Basic $ 0.17 $ 0.12 $ 0.22 $ 0.36 Earnings per share — Diluted: Net income $ 10,486 $ 7,302 $ 13,826 $ 21,979 Weighted-average shares outstanding 62,093 60,867 61,645 60,548 Effect of potentially dilutive securities — 412 255 642 Weighted-average shares outstanding — Diluted 62,093 61,279 61,900 61,190 Net income per common share — Diluted $ 0.17 $ 0.12 $ 0.22 $ 0.36 |
Share Based Awards (Tables)
Share Based Awards (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | stock option transactions during the nine months ended December 31, 2016 : Number of Shares Weighted- Average Exercise Price per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding, April 1, 2016 2,447,286 $ 19.55 6.3 $ 574 Granted 1,056,500 12.82 7.4 Forfeited/Canceled (539,471 ) 22.13 4.7 Outstanding, December 31, 2016 2,964,315 $ 16.68 6.4 $ 377 Vested and expected to vest, September 30, 2016 2,652,038 $ 16.93 6.3 $ 329 Exercisable, December 31, 2016 586,120 $ 25.05 3.9 $ 11 |
Schedule of Share Based Compensation Valuation Assumption | We utilize the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions: Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Expected term 6.3 years 3.9 years 6.0 - 6.6 years 3.8 - 3.9 years Expected volatility 37.1% 38.9% 36.9% - 37.4% 38.3% - 38.9% Expected dividends —% 5.3% —% 4.1% - 5.3% Risk-free rate 1.5% 1.3% 1.2% - 1.5% 1.3% - 1.6% |
Summary of stock options granted | During the nine months ended December 31, 2016 , a total of 1,056,500 options to purchase shares of common stock were granted under the 2015 Plan at an exercise price equal to the market price of our common stock on the date of grant, as summarized below: Option Grant Date Number of Shares Exercise Price Vesting Terms (1) Expiration November 1, 2016 50,000 $ 12.71 Four years November 1, 2024 July 11, 2016 150,000 $ 12.60 Four years July 11, 2024 May 31, 2016 100,000 $ 12.71 Five years May 31, 2024 May 25, 2016 216,500 $ 12.78 Four years May 25, 2024 May 24, 2016 540,000 $ 12.93 Four years May 24, 2024 Fiscal year 2017 grants 1,056,500 |
Schedule of Employee Stock Options and Performance Based Awards by Nonvested Stock options | Non-vested stock option award activity during the nine months ended December 31, 2016 is summarized as follows: Non-Vested Number of Shares Weighted- Average Grant-Date Fair Value per Share Outstanding, April 1, 2016 1,859,750 $ 4.67 Granted 1,056,500 4.92 Vested (276,595 ) 4.30 Forfeited/Canceled (261,460 ) 4.38 Outstanding, December 31, 2016 2,378,195 $ 4.72 |
Operating Segment Information (
Operating Segment Information (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Operating segment data | Three Months Ended December 31, Nine Months Ended December 31, 2016 2015 2016 2015 Revenue: Software and Related Solutions $ 106,958 $ 93,927 $ 312,854 $ 291,783 RCM and Related Services 20,910 22,486 64,385 65,313 Hospital Solutions (1) — 619 — 7,469 Consolidated revenue $ 127,868 $ 117,032 $ 377,239 $ 364,565 Gross profit (loss): Software and Related Solutions $ 71,252 $ 58,949 $ 204,414 $ 184,982 RCM and Related Services 7,077 7,769 21,337 20,792 Hospital Solutions (1) — (69 ) — 2,569 Unallocated cost of revenue (2) (4,813 ) (3,402 ) (15,676 ) (10,138 ) Consolidated gross profit $ 73,516 $ 63,247 $ 210,075 $ 198,205 ___________________________________ (1) The former Hospital Solutions Division was divested in October 2015 and therefore, does not represent a distinct operating segment. Historical amounts for Hospital Solutions have not been revised. (2) Consists of amortization of acquired software technology and amortization of capitalized software costs not allocated to the operating segments for the purposes of measuring performance. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Costs and expenses: | ||||
Total share-based compensation | $ 2,001 | $ 743 | $ 5,177 | $ 2,328 |
Income tax benefit | (718) | (225) | (1,825) | (701) |
Decrease in net income | 1,283 | 518 | 3,352 | 1,627 |
Cost of revenue [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | 144 | 101 | 459 | 300 |
Research and development costs [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | 273 | 67 | 690 | 280 |
Selling, general and administrative [Member] | ||||
Costs and expenses: | ||||
Total share-based compensation | $ 1,584 | $ 575 | $ 4,028 | $ 1,748 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Mar. 31, 2016 | |
LIABILITIES | |||
Fair value of contingent consideration | $ 18,367 | $ 24,153 | |
Fair Value, Measurements, Recurring [Member] | |||
ASSETS | |||
Cash and cash equivalents | [1] | 23,994 | 27,176 |
Restricted cash and cash equivalents | 4,647 | 5,320 | |
Marketable securities | [2] | 9,297 | |
Total | 28,641 | 41,793 | |
LIABILITIES | |||
Fair value of contingent consideration | 18,367 | 23,843 | |
Total | 18,367 | 23,843 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | |||
ASSETS | |||
Cash and cash equivalents | [1] | 23,994 | 27,176 |
Restricted cash and cash equivalents | 4,647 | 5,320 | |
Marketable securities | [2] | 9,297 | |
Total | 28,641 | 41,793 | |
LIABILITIES | |||
Fair value of contingent consideration | 0 | 0 | |
Total | 0 | 0 | |
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | |||
ASSETS | |||
Cash and cash equivalents | [1] | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 | |
Marketable securities | [2] | 0 | |
Total | 0 | 0 | |
LIABILITIES | |||
Fair value of contingent consideration | 18,367 | 0 | |
Total | 18,367 | 0 | |
Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | |||
ASSETS | |||
Cash and cash equivalents | [1] | 0 | 0 |
Restricted cash and cash equivalents | 0 | 0 | |
Marketable securities | [2] | 0 | |
Total | 0 | 0 | |
LIABILITIES | |||
Fair value of contingent consideration | 0 | 23,843 | |
Total | $ 0 | $ 23,843 | |
[1] | Cash equivalents consist primarily of money market funds. | ||
[2] | Marketable securities consist of available-for-sale money market instruments and fixed-income securities, including certificates of deposit, corporate bonds and notes, and municipal securities. |
Fair Value Measurements (Deta34
Fair Value Measurements (Details 1) $ in Thousands | 9 Months Ended |
Dec. 31, 2016USD ($) | |
Company's assets measured at fair value using significant unobservable inputs (Level 3) | |
Balance at April 1, 2016 | $ 23,843 |
Settlement of contingent consideration related acquisitions | 9,273 |
Fair value adjustments | 3,797 |
Balance at December 31, 2016 | 0 |
Contingent Consideration Arrangements, Change in Fair Value | $ (18,367) |
Fair Value Measurement (Details
Fair Value Measurement (Details Textual) - USD ($) $ in Thousands | Jan. 04, 2016 | Dec. 31, 2016 |
Business Combination, Separately Recognized Transactions [Line Items] | ||
Fair value adjustments | $ 3,797 | |
HealthFusion [Member] | ||
Business Combination, Separately Recognized Transactions [Line Items] | ||
Fair value adjustments | 3,367 | |
Fair Value Measurements (Textual) | ||
Total preliminary purchase price | $ 183,049 | |
Mirth [Member] | ||
Business Combination, Separately Recognized Transactions [Line Items] | ||
Fair value adjustments | $ 430 |
Business Combinations and Dis36
Business Combinations and Dispositions - HealthFusion Acquisition - USD ($) | Jan. 04, 2016 | Dec. 31, 2016 | Mar. 31, 2016 |
Business Acquisition [Line Items] | |||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | $ (18,367,000) | ||
Goodwill | 185,888,000 | $ 188,837,000 | |
Fair value adjustments | 3,797,000 | ||
Fair value of contingent consideration | 18,367,000 | $ 24,153,000 | |
Goodwill, Purchase Accounting Adjustments | 2,948,549 | ||
HealthFusion [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Value, High | $ 25,000 | ||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 16,700,000 | ||
Initial purchase price | 165,000,000 | ||
Preliminary working capital and other adjustments | 1,349,000 | ||
Total preliminary purchase price | 183,049,000 | ||
Acquired cash and cash equivalents | 2,225,000 | ||
Accounts receivable, net | 1,514,000 | ||
Prepaid expenses and other current assets | 4,645,000 | ||
Other assets | 700,000 | ||
Accounts payable | (1,085,000) | ||
Accrued compensation and related benefits | (533,000) | ||
Deferred revenues | (1,067,000) | ||
Deferred income taxes, net | (9,078,000) | ||
Other liabilities | (2,721,000) | ||
Total preliminary net tangible assets acquired and liabilities assumed | (4,326,000) | ||
Goodwill | 112,375,000 | ||
Total preliminary identifiable intangible assets acquired | 187,375,000 | ||
Total preliminary purchase price | 183,049,000 | ||
Fair value adjustments | $ 3,367,000 | ||
HealthFusion [Member] | Computer Software, Intangible Asset [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets | 42,500,000 | ||
HealthFusion [Member] | Trade Names [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets | 4,000,000 | ||
HealthFusion [Member] | Customer Relationships [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets | 28,500,000 | ||
HealthFusion [Member] | Equipment and Improvements, Net [Member] | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | 767,000 | ||
HealthFusion [Member] | Software Development [Member] | |||
Business Acquisition [Line Items] | |||
Property, plant and equipment | $ 307,000 |
Business Combinations and Dis37
Business Combinations and Dispositions (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Mar. 31, 2016 | Jan. 04, 2016 |
Fair value of identifiable intangible assets acquired: | |||
Goodwill | $ 185,888 | $ 188,837 | |
HealthFusion [Member] | |||
Fair value of the net tangible assets acquired and liabilities assumed: | |||
Deferred revenues | $ (1,067) | ||
Fair value of identifiable intangible assets acquired: | |||
Goodwill | $ 112,375 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Mar. 31, 2016 |
Goodwill [Line Items] | ||
Goodwill | $ 185,888 | $ 188,837 |
NextGen Division [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 156,547 | |
Software and Related Solutions [Member] | ||
Goodwill [Line Items] | ||
Goodwill | $ 153,598 | |
RCM Services Division [Member] | ||
Goodwill [Line Items] | ||
Goodwill | $ 32,290 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Finite Lived Intangible Assets [Line Items] | |||||
2017 (remaining three months) | $ 5,490 | $ 5,490 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 19,115 | 19,115 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 16,703 | 16,703 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 15,706 | 15,706 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 10,974 | 10,974 | |||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 123,840 | 123,840 | $ 125,728 | ||
Accumulated amortization | (49,118) | (49,118) | (34,053) | ||
Net intangible assets | 74,722 | 74,722 | 91,675 | ||
Finite-Lived Intangible Assets, Amortization Expense, Rolling after Year Five | 6,734 | 6,734 | |||
Amortization | (16,953,000) | $ (5,402,000) | |||
Customer Relationships [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Amortization | (2,568,000) | $ (898,000) | (7,889,000) | (2,692,000) | |
Operating Expense [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
2017 (remaining three months) | 2,527 | 2,527 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 7,264 | 7,264 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 4,852 | 4,852 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 3,855 | 3,855 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 3,006 | 3,006 | |||
Intangible assets, other than capitalized software development costs | |||||
Net intangible assets | 27,516 | 27,516 | |||
Finite-Lived Intangible Assets, Amortization Expense, Rolling after Year Five | 6,012 | 6,012 | |||
Cost of Revenue [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
2017 (remaining three months) | 2,963 | 2,963 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 11,851 | 11,851 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 11,851 | 11,851 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 11,851 | 11,851 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 7,968 | 7,968 | |||
Intangible assets, other than capitalized software development costs | |||||
Net intangible assets | 47,206 | 47,206 | |||
Finite-Lived Intangible Assets, Amortization Expense, Rolling after Year Five | 722 | 722 | |||
Software and Software Development Costs [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Amortization | (3,007,000) | $ (903,000) | (9,064,000) | $ (2,710,000) | |
Customer Relationships [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 50,550 | 50,550 | 50,550 | ||
Accumulated amortization | (26,693) | (26,693) | (19,618) | ||
Net intangible assets | 23,857 | 23,857 | 30,932 | ||
Trade Name & Contracts [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 5,480 | 5,480 | 7,368 | ||
Accumulated amortization | (1,821) | (1,821) | (2,895) | ||
Net intangible assets | 3,659 | 3,659 | 4,473 | ||
Software Technology [Member] | |||||
Intangible assets, other than capitalized software development costs | |||||
Gross carrying amount | 67,810 | 67,810 | 67,810 | ||
Accumulated amortization | (20,604) | (20,604) | (11,540) | ||
Net intangible assets | $ 47,206 | $ 47,206 | $ 56,270 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2016 | Mar. 31, 2016 |
Estimated amortization of intangible assets with determinable lives | ||
2017 (remaining three months) | $ 5,490 | |
2,017 | 19,115 | |
2,018 | 16,703 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 15,706 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 10,974 | |
Net intangible assets | $ 74,722 | $ 91,675 |
Capitalized Software Costs (Det
Capitalized Software Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Research and Development [Abstract] | ||||
Capitalized Computer Software, Amortization | $ (1,807) | $ (6,626) | $ (7,428) | |
Capitalized software development costs | ||||
Gross carrying amount | 103,070 | 103,070 | $ 96,699 | |
Accumulated amortization | (90,075) | (90,075) | (83,449) | |
Net capitalized software costs | $ 12,995 | $ 12,995 | $ 13,250 |
Capitalized Software Costs (D42
Capitalized Software Costs (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity related to net capitalized software costs | |||
Amortization expense related to capitalized software costs | $ (1,807) | $ (6,626) | $ (7,428) |
Estimated amortization of capitalized software costs | |||
2017 (remaining three months) | 1,500 | ||
2,018 | 5,300 | ||
2,019 | 4,300 | ||
2,020 | 1,895 | ||
Total | 12,995 | ||
Amortization of capitalized software costs | $ 6,626 | $ 7,428 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | Jan. 04, 2016 | |
Line of Credit Facility [Line Items] | |||||
Loans outstanding | $ 25,000,000 | $ 25,000,000 | $ 105,000,000 | ||
Remaining borrowing capacity | 225,000,000 | 225,000,000 | |||
Interest expense | 1,631,000 | ||||
Amortization of debt issuance costs | $ (269,000) | $ (807,301.88) | $ 0 | ||
Line of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 250,000 | ||||
Letter of Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | 10,000 | ||||
Swing-Line Loans [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 10,000 |
Composition of Certain Financ44
Composition of Certain Financial Statement Captions (Details) - USD ($) | Dec. 31, 2016 | Mar. 31, 2016 |
Summary of Accounts Receivable | ||
Accounts receivable, gross | $ 86,388,000 | $ 104,467,000 |
Sales return reserve | (8,623,000) | (7,541,000) |
Allowance for doubtful accounts | (2,249,000) | (2,902,000) |
Accounts receivable, net | 75,516,000 | 94,024,000 |
Summary of Prepaid Expense and Other Assets, Current | ||
Prepaid Expense, Current | 13,448,000 | 11,804,000 |
Other Assets, Current | 2,496,000 | 3,106,000 |
Prepaid Expense and Other Assets, Current | 15,944,000 | 14,910,000 |
Summary of Equipment and improvements | ||
Computer equipment | 21,483,000 | 32,213,000 |
Internal-use software | 10,899,000 | 10,201,000 |
Furniture and fixtures | 10,561,000 | 9,799,000 |
Leasehold improvements | 16,538,000 | 13,408,000 |
Equipment and improvements, gross | 59,481,000 | 65,621,000 |
Accumulated depreciation | (33,384,000) | (39,831,000) |
Equipment and improvements, net | 26,097,000 | 25,790,000 |
Summary of Current and non-current deferred revenue | ||
Professional services | 22,005,000 | 23,128,000 |
Undelivered software, hardware and other | 10,469,000 | 14,913,000 |
Support and Maintenance | 8,948,000 | 11,902,000 |
Software related subscription services | 8,341,000 | 7,992,000 |
Deferred revenue | 49,763,000 | 57,935,000 |
Deferred revenue, net of current | 1,312,000 | 1,335,000 |
Summary of Accrued compensation and related benefits | ||
Vacation | 8,003,000 | 8,987,000 |
Payroll, bonus and commission | 10,617,000 | 9,683,000 |
Accrued compensation and related benefits | 18,620,000 | 18,670,000 |
Summary of Other current liabilities | ||
Contingent consideration and other liabilities related to acquisitions | 18,367,000 | 24,153,000 |
Customer Deposits, Current | 3,973,000 | 4,123,000 |
Care Services Liabilities Current | 4,647,000 | 5,339,000 |
Self Insurance Reserve, Current | 1,898,000 | 1,862,000 |
Accrued consulting services, Current | 2,194,000 | 3,650,000 |
Electronic Data Interchange Expense Current | 2,270,000 | 2,604,000 |
Deferred Rent Credit, Current | 1,409,000 | 828,000 |
Accrued Outsourcing Expenses | 1,613,000 | 1,604,000 |
Accrued Royalties, Current | 740,000 | 2,341,000 |
Accrued Employee Benefits, Current | 639,000 | 213,000 |
Taxes Payable | 333,000 | 655,000 |
Accrued Professional Fees | 758,000 | 864,000 |
Other Accrued Liabilities, Current | 5,497,000 | 2,002,000 |
Other Liabilities, Current | 44,338,000 | 50,238,000 |
Deferred Rent Credit, Noncurrent | 9,538,000 | 6,577,000 |
Unrecognized Tax Benefits | 4,729,000 | 4,084 |
Accrued Income Taxes, Noncurrent | 4,084,000 | |
Other Liabilities, Noncurrent | $ 14,267,000 | $ 10,661,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 2,342,000 | $ 1,141,000 | $ 3,950,000 | $ 8,233,000 | |
Effective tax rate (as a percentage) | 18.30% | 13.50% | 22.20% | 27.30% | |
Liability for unrecognized tax benefits | $ 4,729,000 | $ 4,729,000 | $ 4,084 | ||
Period within which the company does not anticipate total unrecognized tax benefits to change | within the next twelve months |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Weighted-average shares outstanding for basic and diluted net income per share | ||||
Net income (in dollars) | $ 10,486,000 | $ 7,302,000 | $ 13,826,000 | $ 21,979,000 |
Basic net income per share: | ||||
Weighted-average shares outstanding - Basic | 62,093 | 60,867 | 61,645 | 60,548 |
Basic net income per common share (in usd per share) | $ 0.17 | $ 0.12 | $ 0.22 | $ 0.36 |
Diluted net income per share: | ||||
Weighted-average shares outstanding - Basic | 62,093 | 60,867 | 61,645 | 60,548 |
Effect of potentially dilutive securities | 0 | 412 | 255 | 642 |
Weighted-average shares outstanding - Diluted | 62,093 | 61,279 | 61,900 | 61,190 |
Diluted net income per common share (in usd per share) | $ 0.17 | $ 0.12 | $ 0.22 | $ 0.36 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||||
Options excluded from the computation of diluted net income per share | 3,054 | 1,839 | 3,015 | 1,789 |
Share Based Awards (Details Tex
Share Based Awards (Details Textual) - USD ($) | Aug. 11, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | Aug. 31, 2015 | Oct. 31, 2005 |
Share Based Awards (Textual) [Abstract] | ||||||||
Outstanding options under 1998 and 2005 plan | 2,964,315,000 | 2,964,315,000 | 2,447,286 | |||||
Weighted-average grant date fair value per share of stock options | $ 4.92 | $ 3.33 | ||||||
Number of shares granted | 1,056,500 | |||||||
Total share-based compensation | $ 2,001,000 | $ 743,000 | $ 5,177,000 | $ 2,328,000 | ||||
Fair value of options vested | 1,189,000 | 1,564,000 | ||||||
Employee Stock Option [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Total unrecognized compensation costs | 8,662,000 | $ 8,662,000 | ||||||
Stock option recognized over weighted average period (in years) | 3 years 2 months | |||||||
Restricted Stock Units Award [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Total share-based compensation | 1,054,000 | 249,000 | $ 2,571,000 | 664,000 | ||||
Total unrecognized compensation costs | 9,930,000 | $ 9,930,000 | ||||||
Stock option recognized over weighted average period (in years) | 2 years 2 months | |||||||
Employee Share Purchase Plan [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Total share-based compensation | $ 70,000 | $ 70,000 | $ 277,000 | $ 216,000 | ||||
2005 Stock Options Plan [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Common stock reserved | 4,800,000 | |||||||
Outstanding options under 1998 and 2005 plan | 969,565 | 969,565 | ||||||
Number of Shares Outstanding | 567 | 567 | ||||||
Two Thousand Fifteen Stock Options Plan [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Common stock reserved | 11,500,000 | |||||||
Outstanding options under 1998 and 2005 plan | 1,994,750 | 1,994,750 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 933,165 | 933,165 | ||||||
Shares available for future grant | 8,079,983 | 8,079,983 | ||||||
Two Thousand Fifteen Stock Options Plan [Member] | Restricted Stock Units Award [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 857,456 | |||||||
Number of Shares Outstanding | 933,732 | 933,732 | 191,247 | |||||
Two Thousand Fifteen Stock Options Plan [Member] | Employee Stock Option [Member] | ||||||||
Share Based Awards (Textual) [Abstract] | ||||||||
Expiration period (in years) | 10 years | |||||||
Employee Share Purchase Plan [Member] | ||||||||
Employee Stock Purchase Plan [Abstract] | ||||||||
Shares reserved for future grant | 4,000,000 | 3,790,124 | 3,790,124 | |||||
Maximum percentage of gross payroll deduction | 15.00% | |||||||
Purchase price as a percentage of fair market value | 90.00% | |||||||
Maximum shares purchase in a single transaction | 1,500 | |||||||
Maximum amount purchased in a calendar year | $ 25,000 | |||||||
Shares issued | 209,876 | 209,876 |
Share Based Awards (Details)
Share Based Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Mar. 31, 2016 | |
Number of Shares | ||
Outstanding, April 1, 2016 | 2,447,286 | |
Granted | (1,056,500) | |
Forfeited/Canceled | (539,471) | |
Outstanding, December 31, 2016 | 2,964,315,000 | 2,447,286 |
Vested and expected to vest, September 30, 2016 | 2,652,038,000 | |
Exercisable, December 31, 2016 | 586,120,000 | |
Weighted- Average Exercise Price per Share | ||
Outstanding, April 1, 2016 (in dollars per share) | $ 19.55 | |
Granted (in dollars per share) | 12.82 | |
Forfeited/Canceled (in dollars per share) | 22.13 | |
Outstanding, June 30, 2016 (in dollars per share) | 16.68 | $ 19.55 |
Vested and expected to vest, June 30, 2016 (in dollars per share) | 16.93 | |
Exercisable, June 30, 2016 (in dollars per share) | $ 30 | |
Weighted- Average Remaining Contractual Life (years) | ||
Outstanding | 6 years 5 months | 6 years 3 months |
Granted | 7 years 5 months | |
Forfeited/Canceled | 4 years 8 months | |
Vested and expected to vest, September 30, 2016 | 6 years 3 months | |
Exercisable, December 31, 2016 | 3 years 11 months | |
Aggregate Intrinsic Value Outstanding Beginning Balance | $ 574 | |
Aggregate Intrinsic Value Outstanding Ending Balance | 377 | $ 574 |
Aggregate Intrinsic Value Vested and expected to vest | 329 | |
Aggregate Intrinsic Value Exercisable | $ 11 |
Share Based Awards (Details 1)
Share Based Awards (Details 1) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Share Based Compensation Valuation Assumption | ||||
Expected term | 6 years 3 months | 3 years 11 months | ||
Expected volatility | 37.10% | 38.90% | ||
Expected dividends | 0.00% | 5.30% | ||
Risk-free rate | 1.50% | 1.30% | ||
Weighted-average grant date fair value per share of stock options | $ 4.92 | $ 3.33 |
Share Based Awards (Details 2)
Share Based Awards (Details 2) | 9 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Summary of stock options granted | |
Number of shares granted | 1,056,500 |
Two Thousand Fifteen Stock Options Plan [Member] | Option Grant Date First November Two Thousand Sixteen [Member] | |
Summary of stock options granted | |
Option Grant Date | November 1, 2016 |
Number of shares granted | 50,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 12.71 |
Vesting period | 4 years |
Expiration | Nov. 1, 2024 |
Two Thousand Fifteen Stock Options Plan [Member] | Option Grant Date Thirty First May Two Thousand Sixteen [Member] [Member] | |
Summary of stock options granted | |
Option Grant Date | May 31, 2016 |
Number of shares granted | 100,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 12.71 |
Vesting period | 5 years |
Expiration | May 31, 2024 |
Two Thousand Fifteen Stock Options Plan [Member] | Option Grant Date Twenty Fifth May Two Thousand Sixteen [Member] | |
Summary of stock options granted | |
Option Grant Date | May 25, 2016 |
Number of shares granted | 216,500 |
Exercise Price Granted (in usd per share) | $ / shares | $ 12.8 |
Vesting period | 4 years |
Expiration | May 25, 2024 |
Two Thousand Fifteen Stock Options Plan [Member] | Option Grant Date May Twenty Fourth Two Thousand Sixteen [Member] | |
Summary of stock options granted | |
Option Grant Date | May 24, 2016 |
Number of shares granted | 540,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 12.9 |
Vesting period | 4 years |
Expiration | May 24, 2024 |
Two Thousand Fifteen Stock Options Plan [Member] | OptionGrantDateJulyEleventh [Member] | |
Summary of stock options granted | |
Option Grant Date | July 11, 2016 |
Number of shares granted | 150,000 |
Exercise Price Granted (in usd per share) | $ / shares | $ 12.60 |
Vesting period | 4 years |
Expiration | Jul. 11, 2024 |
Share Based Awards (Details 3)
Share Based Awards (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 2,001 | $ 743 | $ 5,177 | $ 2,328 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||||
Non-Vested Number of Shares Outstanding Beginning Balance | 1,859,750 | |||
Non-Vested Number of Shares Granted | 1,056,500 | |||
Non-Vested Number of Shares Vested | (276,595) | |||
Non-Vested Number of Shares Forfeited | (261,460) | |||
Non-Vested Number of Shares Outstanding Ending Balance | 2,378,195 | 2,378,195 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Weighted Average Fair Value per Share Price Beginning Balance | $ 4.67 | |||
Weighted-average grant date fair value per share of stock options | 4.92 | $ 3.33 | ||
Weighted Average Fair Value per Share Price Vested | 4.30 | |||
Weighted Average Fair Value per Share Price Forfeited | 4.38 | |||
Weighted Average Fair Value per Share Price Ending Balance | $ 4.72 | $ 4.72 | ||
Employee Share Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 70 | $ 70 | $ 277 | $ 216 |
Share Based Awards Share Based
Share Based Awards Share Based Awards - Restricted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 1,056,500 | |||
Allocated Share-based Compensation Expense | $ 2,001 | $ 743 | $ 5,177 | $ 2,328 |
Restricted Stock Units Award [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 1,054 | $ 249 | $ 2,571 | $ 664 |
Restricted Stock Units Award [Member] | Two Thousand Fifteen Stock Options Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Number of Shares Outstanding Beginning Balance | 191,247 | |||
Granted | 857,456 | |||
Vested | (68,309) | |||
Number of Shares Outstanding Ending Balance | 933,732 | 933,732 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Weighted Average Grant-Date Fair Value per Share, Beginning of Period (in dollars per share) | $ 14.44 | |||
Weighted Average Grant-Date Fair Value per Share, Granted (in dollars per share) | 12.81 | |||
Weighted Average Grant-Date Fair Value per Share, Vested (in dollars per share) | 14.29 | |||
Weighted Average Grant-Date Fair Value per Share, End of Period (in dollars per share) | $ 12.80 | $ 12.80 | ||
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited | (46,662) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 12.78 | |||
Award Grant Date Twenty-Nine December Two Thousand Sixteen [Member] | Two Thousand Fifteen Stock Options Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 123,082 |
Commitments Guarantees and Cont
Commitments Guarantees and Contingencies (Details Textual) | 9 Months Ended |
Dec. 31, 2016 | |
Commitments Guarantees and Contingencies (Textual) | |
Applicable program documentation period | 365 days |
Operating Segment Information55
Operating Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Operating Data | ||||
Revenue | $ 127,868,000 | $ 117,032,000 | $ 377,239,000 | $ 364,565,000 |
Gross Profit | 73,516,000 | 63,247,000 | 210,075,000 | 198,205,000 |
Operating income | (13,461,000) | (8,437,000) | (20,358,000) | (29,967,000) |
Research and development costs, net | 19,714,000 | 14,518,000 | 56,230,000 | 49,584,000 |
Amortization of capitalized software costs | 6,626,000 | 7,428,000 | ||
Software and Related Solutions [Member] | ||||
Segment Operating Data | ||||
Revenue | 106,958,000 | 93,927,000 | 312,854,000 | 291,783,000 |
Gross Profit | 71,252,000 | 58,949,000 | 204,414,000 | 184,982,000 |
RCM Services Division [Member] | ||||
Segment Operating Data | ||||
Revenue | 20,910,000 | 22,486,000 | 64,385,000 | 65,313,000 |
Gross Profit | 7,077,000 | 7,769,000 | 21,337,000 | 20,792,000 |
Hospital Solutions Division [Member] | ||||
Segment Operating Data | ||||
Revenue | 0 | 619,000 | 0 | 7,469,000 |
Gross Profit | 0 | (69,000) | 0 | 2,569,000 |
Unallocated Cost of Revenue [Member] | ||||
Segment Operating Data | ||||
Gross Profit | $ (4,813,000) | $ (3,402,000) | $ (15,676,000) | $ (10,138,000) |
Restructuring Plan (Details)
Restructuring Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Costs [Abstract] | ||||
Restructuring expense | $ 231 | $ 0 | $ 4,685 | $ 0 |
Uncategorized Items - qsii-2016
Label | Element | Value |
Unpaid additions to equipment and improvements | qsii_Unpaidadditionstoequipmentandimprovements | $ 0 |